x Abu Dhabi, UAESunday 21 January 2018

Maldives terminates contract and takes control of national airport

The press secretary of the Maldives president promised that the transfer of airport operations to the state-run Maldivian Airport Company Limited would be ¿smooth and seamless.

NEW DELHI // The government of the Maldives yesterday took back control of the country's main international airport from an Indian-Malaysian consortium, a move that threatens to spoil ties between New Delhi and the island nation.

GMR, the giant Indian construction and engineering company, and Malaysian Airports Holding Berhad had been overseeing the expansion, modernisation and operation of Ibrahim Nassir International Airport since they were awarded a 25-year lease by the Maldivian government under president Mohamed Nasheed in 2010.

The privatisation of the airport angered opponents of Mr Nasheed, who was forced from office in February after weeks of public protests. He was succeeded in office by one of those opponents, Mohammed Waheed Hassan, who announced last week that his government would revoke the US$511 million (Dh1.87 billion) contract.

Masood Imad, the president's press secretary, promised that the transfer of airport operations to the state-run Maldivian Airport Company Limited (MACL) would be "smooth and seamless".

Mr Imad said that GMR would work with the Maldives government during a three-week transition, and that no jobs would be lost. Any employees "who wish to stay back after GMR leaves will be taken on board by MACL", he said on Friday.

The takeover came barely a day after the Singapore supreme court ruled that the Maldives government could "do what it wants, including expropriating the airport". Earlier, a Singapore high court judgement had prohibited Maldives from terminating the contract. Its terms stipulated that any disputes would be heard in Singapore courts.

The original contract had permitted GMR to collect a fee of US$25 from each international passenger. When a Maldives court barred the fee, the terms of the contract called for MACL to pay it. When this sum proved to be more than what GMR was paying the Maldives government under the operating agreement, the Hassan government chose to cancel the contract.

The reaction from India has been strong. In a letter written on November 29 to the Maldives embassy in New Delhi, DS Rawat, the secretary general of the Associated Chambers of Commerce and Industry of India, said that the government's decision "violated the spirit" of the 2010 accord.

The Indian government, in a more cautiously worded statement, said on Thursday that the termination of GMR's contract would "inevitably affect bilateral ties" and expressed concern that the issue would become "a platform for anti-India elements".

India's Business Standard newspaper urged the Indian government to be more proactive in defending the interests of Indian business.

"If an Indian company is being victimised by a foreign country's government, should not the Indian government step in, particularly when the contract was awarded by the Maldives government? After all, the Chinese government very definitely would," the newspaper said in an editorial on Thursday.

Anti-Indian sentiment in the Maldives is running high. At a recent rally, one of Mr Waheed's spokesmen called the Indian high commissioner in the Maldives "a traitor" and "an enemy of the Maldives and Maldivian people".

S Chandrasekharan, the director of the South Asia Analysis Group, a New Delhi-based think tank, said yesterday that the Maldives shared a pattern with many of India's neighbouring countries, "where nationalism is being equated with anti-Indianism".

He pointed out that India had "a real friend" in Mr Nasheed, the former Maldivian president. He said Mr Nasheed had been forced from office by "unfair means" and chastised the Indian government for quickly endorsing his successor. "That was the first mistake we made," Mr Chandrasekharan said.

Mr Chandrasekharan acknowledged that the contract was structured in favour of GMR. "GMR was taking a lot more than they should have."

But the contract was, in the final analysis, "a commercial transaction", he said. "As a country, either we shouldn't have put our prestige behind it, or we should have followed through fully. Now India has lost face. We aren't used to this kind of economic diplomacy. We're still on a learning curve."